Fireside | Architecting Singleness of Money

Uh, I hope we're going to keep you awake and hopefully have a little bit of fun. Uh, I met Tony a couple of months ago at Cyus in Frankfurt, right? and we were together at a panel and uh after the panel he told me uh some good advice about how to keep the crowd engaged and uh one of those advice say don't prepare question just grill people on stage and that's how it's going to be entertaining so this is what we're going to do today with you guys um thank you very much for being here Tony nice [snorts] to be here

well I'll start maybe by asking asking to introduce yourself a little bit, but I guess I have a little bit of echo, but I I guess it's just on our side. Can you hear us? Well, okay. Awesome. So, Tony, you spent like 20 years at CD.

You're probably one of the most tr person today and at that conference. Maybe you could walk us through like what was your aha moment and you know how you came up with Ubix. You're you're right. I spent 30 years in in Tradfi. So you know you can burn me at the stake as an offering to the DeFi gods if you like.

I mean I'm up for that sacrifice if if it will be uh you know help the cause. Um but my epiphany was look I'd been working in a big bank city bank and the banks had been told by the regulators the US banks had been told by the regulators don't touch public chains.

So the OC, the Fed, the FDIC said keep off the grass. And then in November 24 there was the US election and it was clear to me the morning after the US election that that picture would change. So the first uh realization I had was banks would have to start engaging with public chains. Now there might be some people in the audience who don't think that's a good thing. Um, but actually I think there's a very productive place that these two things come together, web 3 and tradi.

It doesn't take away from anything crypto or DeFi or peer-to-peer. It adds

and that point the point at which I'm working towards is when every bank and fintech on the planet offers wallets that are connected to many chains. If you want to have a self-custodial wallet, have it. But if we really want there to be mass adoption, then we have to recognize that banks and fintexs have customers that trust them.

Yeah.

In today's world, you cannot get a wallet from your bank or your fintech. Generally speaking, there are exceptions to prove the rule, but generally speaking, you cannot get a wallet from your bank or fintech. I want that world to come into being where you can get a bank wallet or a fintech wallet connected to public chains.

Wow. Superb. And what do you think right now are the blocker for that? Because as you said after the election the clarity act is still having a little bit of bump in the road but we've made so much progress on the regulatory side. So

stable coins, stable coin. So you can imagine that the the banks were in an environment where there's a big keep off the grass sign. Now if the regulator removes the keep off the grass sign, do people start having picnics? Do they start having barbecues? It takes them a little bit of time to get overcome.

But there's a forcing function and that forcing function is stable coins. Because the banks don't want to be disintermediated by stable coins. Stable coins live on public blockchains and therefore the banks and the fintex have to occupy that space or they get disintermediated. So stable coins are the forcing function that make banks and fintexs offer wallets. That make me think, you know, how do you sell stable coin to banks?

Because as you said, it can be dissentered, mediated u and so how do you sell that to them? The easiest sell in the world. It's easy to sell stable coins to banks and fintex. And to the extent that people in the audience want to join in in this mission to get banks and fintex to adopt web 3 technology, here is the sales pitch. Uh you know, how do you get a bank to do a wallet?

Here's here's the conversation with the bank. Do you believe we're entering a world of tokens and chains? There's nobody who says no. Do you know which token will win or which chain will win? There's no one who can say yes.

So the the insurance policy these people are risk managers. The cheapest insurance policy is you get a wallet because once the bank or the fintech can offer a wallet to its customers, whichever token comes, whichever chain comes, it's able to transact in those instruments. So, this is a very different go to market than the crypto industry has been trying in the past. Here's what the here's what the crypto industry has tried in the past. I am a chain.

I go to a bank and I say, "I'm the best chain."

Yes.

Right. [laughter]

Exactly.

And they hire the most charismatic salesperson that they possibly can. So when you're in a bank, you hear 15 charismatic people saying, "I'm the best chain." And what that does is it creates a a computation that needs to take place on the bank side that takes three years. So a far superior go to market for the industry is we don't know which chain will win. We don't know which token will win.

But if you have this wallet infrastructure, you're prepared for a world of tokens and chains. Again, I I know it's a DeFi audience. Use your self-custody wallets. I use self-custody wallets myself, but just allow your second cousin and allow the corner store and allow the big business to use a wallet provided by a bank or a fintech. All that does is it creates the acceptance network that we need for our instruments to flourish.

If we want stable coins to win payments, not just within crypto, but the whole payments target market, the the the forcing function for that or the thing that enables stable coins to win payments, $2.5 trillion of of opportunity is if every bank and fintech offers a wallet. So this is the this is the go to go to market from this industry to tradfi needs to be done in a different way. Don't try to convince a bank that your chain is the best chain. This is a very narrow and dumb way of trying to get finance on chain.

Yeah. I remember also you saying to the bank, go where your users are and in five 10 maybe even shorter like they're going to be on those systems and so you better you know be in here and I heard that actually last week when I was at D in New York when there's other institution and people saying well actually the banks are really listening to where their users are. They're like a I would say a product company like anyone else but

if people are using this they're going to start positioning and very interesting to so what you're saying is really like the not the Trojan horse but I would say really like the entry point for institution and banks is through like the wallet infrastructure.

The wallet infrastructure is the common denominator. It's the it's the cheapest insurance policy that a bank can buy. It's the first thing that they should buy. But then on top of that they want to they always want to know what is the use case. Um you know for some reason we've taught ourselves like the banks have all the senior people in the banks they think a smart question is what is the use case?

I I think when you're when you're dealing with a general purpose technology like blockchain it's a really dumb question but they want to know the use case. So again, we we need the simplest use case possible and that use case is receiving stable coins, not issuing stable coins. So here here's the dynamic. One of one of the favorite ways for banks and fintexs to make money is foreign exchange. Any bank or fintech outside of the US that catches a dollar stable coin and converts it into local currency makes FX.

There's a ton of FX to be made. There are billions of dollars of FX to be made. And you might say, well, I don't want that revenue to go to the banks. But that's the business case for them to get wallets. Once the banks and the fintexs have got wallets, there's a global acceptance network for tokens of all kind of all kinds.

Then the games really begin. Then web 3 wins. Why does web 3 win? Because ours is the general purpose technology. The bank account, Swift, AC, credit, debit cards are the specialurpose technology.

The special purpose technology doesn't win when the general purpose technology is ubiquitous. So we all want do we all want traditional do we want this? Do we want finance to come on chain? Well, I think a number of parties do want finance to come on chain. Let's get our together in terms of go to market.

Don't give the traditional institutions a computation that takes them three years. Give them a computation that takes them five minutes to say yes.

We want to get them to yes. But then how do you because usually you know like the banks they want to also like own the infrastructure.

So who us?

Who wants to own

the the banks? They're going to be willing to have you know ownership of the infrastructure. And we've seen some of those moves in the past, you know, with Cororum and some other of those, you know, I would say consortium chain and they they can be a little bit frisky say, well, we're going to deploy some assets on a public infrastructure. And so how do you answer to those concern when they come and say, well, whatever is going to be that chain L2, Ethereum or even another ecosystem, they might not be very confident about deploying their asset on on those public infrastructure and they want to own it. So let let them go through their stages of realization.

Mhm.

You know, if most of the banks well who are who are doing anything at all, they start on private permission. Again, the keep off the grass sign has been removed. You're starting to see them. Okay, maybe I can have a a barbecue in the corner or maybe if I can picnic over here. They're not really occupying the space yet, but the entry point is once they can give wallets to their customers, those wallets can connect to multiple different chains.

The door has been opened irreversibly. So, we need to plot how to get these wallets into every bank and fintech on the planet. They don't want to be disintermediated. Stable coins are coming. They're scared.

We want to give them something easy to say yes to. The wallet is the first thing. And the use case of make for an exchange is extraordinarily compelling for them. So that's look this isn't just talk. Whether whether whatever we see on the stage doesn't matter.

This is happening in the world.

There's the forces have already been unleashed. The banks and the fintexs already have the sniff of fees and FX in their nostrils. If if you're friends with the wallet providers, you'll you'll know that the RFPs are like that from banks and fintex. This is already happening. So my firm belief is that within 3 to five years it's going to be very very easy for you to get an address from your bank or your fintech.

And what that means is the world of tokens and chains, the general purpose world wins. The old the old special purpose rails become less used. This is firm prediction. This is h this is math. This is the commercial interest.

This is the the future is the migration of traditional finance to web 3 rails. Now we can either we can do a we can go about it the easy way or the hard or the hard way. And what I do think is that a lot of people in the in the web 3 space they got a shitty go to market. They don't know how to sell to banks. [sighs]

Are swearing allowed?

I think there's definitely some challenges u but um we're getting more and more used to talk to institution at least at also like the the work that we try to do at the at the enterprise alliance and uh that's why we go to those events. I think um one of the the thing I was talking to you before is I preached to my industry which is like web 3, Ethereum in general. I say it's time to get off your bubble and to go and see the world. I think it's very there is of course that that those values you know like the cyber punk movement and everything. It's very important where it comes from the also fundamental research but I think it's also very like important for us to start going and and do like the normal sales cycle go on the floor and talk to those institution reexplain what why do you need a blockchain go to some PSP that never heard about a wallet I was last year you know at Nasha a conference in86 trillion dollars like sepa of of the United States um in New Orleans and and I would go on the floor from booth to booth and ask you know like how do you look at that technology from your perspective and some people they just like look at me say what those scam stuff those NFT whatever you can and but I feed out of that because I think it's super important like those people that you talk to and when you get to after maybe five or 10 rejection there's one that's going to be huh interesting I would like to learn more and that's I think what we need to do more like collectively

well talking is one thing but in Hollywood they say show don't tell and lots of the folks in traditional finance have never seen a stable coin you know the people who are regulating last last week I I saw a news item that the deputy governor of the bank of England Sarah Breeden was talking about banning unhosted wallets she's never seen an unhosted wallet she doesn't have a wallet on her So the there's a fundamental experiential or empirical gap. The folks who are on who we want to take on a journey. We have to show don't tell. And I think we're I think we're very good at white papers and telling and less good at show. Well, speaking of showing, you you like founding like Ubex about like 10 months ago or a year, right?

Incorporation 12 months ago.

12 months ago. You raised like some money recently. I think I'm curious. Can you tell us more about what stage you are right now?

Sure. Um so I had this realization that banks and fintex would adopt uh wallets and that st so the the other key thing is um what people were saying around that time in terms of the market structure of stable coins was that stable coins would they have a power law that means there's only going to be a few issuers and US dollar stable coins were going to take over the world. This I knew this was I knew this was nonsense. Um, I knew that the market structure for stable coins would be many to many and pluralistic. So this is like I I knew it because every time in history when a new form factor of payments has come into being that's how the market has developed.

So if we were there was so there was a time let's say in the late 1960s where there were only two credit cards and they were American US dollar credit cards. Now if Twitter existed then everyone would be saying oh my god the world is going to be dominated by two or three or four and there's no space for anyone else and how can we have more credit card issuers otherwise there would be fragmentation and how are we going to make these things interoperable

all this would be talked about the credit card market at that point in time but if you fast forward to 2026 there are 16,000 issuers and no problem and it's a pluralistic market structure and every currency has its credit cards and you can take you took your credit card from New York from JP Morgan you spend it in the hotel here no problem the hotel doesn't give a damn about the issuer so believe it or not the the market structure for tokenized money is going to be many to many and what that what does that mean many issuers Mhm.

And many people who want to accept it. And this is a key insight about singleness of money. Singleness of money means the person who accepts an instrument doesn't give a damn about the issuer. When you take your your JP Morgan credit card to pay the hotel bill, the hotel doesn't give a damn about the issuer.

True. They didn't give a damn. So we're we are the tokenized money will be a many to many network. We need to get to the place where the issuer doesn't matter to the receiver of the tokenized money and that's the point at which they will become ubiquitous. That's the point at which tokenized money will take the entire payments TAM the full $2.

5 trillion of market opportunity. You know, people think that stable coins are profit profitable at the moment because the big couple of players make $20 billion. You know, whoopdedoo. What's $20 billion compared to $2.5 trillion?

So, the place for us to drive the industry, everyone on the planet can use a self-hosted wallet or a wallet provided by a bank or a wallet provided by a fintech or a wallet provided by an exchange. Those wallets connect into multiple blockchains. Then whatever token is the best is going to win. Stable coins, tokenized deposits, tokenized money market funds, other real world assets. All the beautiful thing about our world is that we have a general purpose technology where the tokens can represent whatever the hell someone wants them to represent.

The adoption of that technology is a function of access to wallets. access to self-custody wallets at the moment is infinite, but there's a barrier from from lots of people in businesses who don't want to use self-custody wallets. So, when we bring the hundreds of millions of account relationships, the billions of account relationships into the wallet world, then tokens win and chains win. And by the way, it's not ch it's not chain versus chain. There's plenty of room for plenty for lots of chains.

The chains will find their own niches. So the this this makes it all the more ridiculous when 15 charismatic salespeople go into a bank saying my chain is the best chain. They're just pushing back adoption.

So I guess you said one thing like we have

sorry you were going to ask me about my company but you know more interested. No, no, but the the you know like the best stable coin it's like may I'm curious to know like what do you think is a good stable coin? what is a good stable coin and a bad stable coin and um and maybe also another another point is you know we have a a lot of people that are building like cutting edge you know defy product in here and I would be curious to know like what's your what would be your advice of like a mindset and framework if they want to address more institution and banks

to you know for the for they go to market

the good stable coin is the one which is accepted everywhere are. So, here's the here's the thing. There's there's probably lots of stable coin issuers and they all think they're competing against the other issuers and they can except on acceptance. So the the the the thing that needs to happen for issuers to be successful is they have to realize that there needs to be a mutualized acceptance network. Mutualized acceptance network.

Now let me give you some you know love circle USDC great. They've had to pay people to accept their coins. Coinbase, $900 million. Binance, $60 million. You know, the crazy comparison is in the stable coin world, the issuer pays for acceptance.

In the credit card world, the accepting network pays the issuer. When you take your JP Morgan coin to the hotel, JP Morgan get paid one and a half%. They didn't pay the hotel to accept JP Morgan credit cards. They pay JP Morgan.

So, we need to move to a world where the issuers wake up and realize that we need to build a mutualized acceptance network. Now, in the history of payments, the alternative is this. So, you have this thing called Circle Payments Network. In the best case, it's American Express. American Express's single issuer proprietary network.

That's a one to many. Worst case, it's Diner Club. Diners Club was laughable because it was not you could never guarantee it was going to be accepted because a single issuer can't build global acceptance. So the network that works, the network that hypers scales is many to many. any any off-ramp can accept all tokens and then you get a very very you get quadratic scaling you get telephone network like scaling and then tokenized money wins.

So, you know, eyes on the prize for the industry. The the prize is the $2.5 trillion of revenue available in the payment space. The prize is reached when we have mutualized acceptance for our instruments. And it's very hard for an issuer to get their head around this.

The issuer cannot matter to the recipient. The issuer matters to the sender. You chose JP Morgan credit card because it's given you certain attributes. So you care about the issuer. You're the holder of the token.

But when you go to the hotel, the hotel shouldn't give a damn about the issuer. Okay. Well, right on time. Um I think I don't know if we have time for question. I do we Okay.

Well, thank you very much, Tony. And I guess if there is any question in the audience uh we'll take any and can you see you've been crystal clear. Uh there is one over there.

Sure. What do you view as the biggest blockers to this mutualized acceptance network today? One significant blocker is banks and regulated players have to figure out whether using a blockchain is an outsourcing from a regulatory perspective, you know. So if if a bank wants to use Amazon web services, it sends Amazon something called a third party risk management questionnaire and Amazon have to get all the questions right otherwise the bank won't use them. If I want to use Ethereum, where do I send the questionnaire?

So the answer to that is regulators should make it clear that banks and fintex are welcome to use public permission networks and don't have to apply those third party risk management frameworks. If that blocker were removed, I believe we would see a huge wave of adoption. So for anyone who's involved in um you know policy, this is a this is a very important rock to crack to crack. We have to make the argument that banks can banks and fintex can use public permissionless networks without treating them like an outsourcing. That's a long education um path.

I I was with a bank recently on a dinner and we were discussing about the upgrade of Ethereum and one of them tell well you know when there is the upgrade like Fusaka um in December well like how do we know like the billion dollars that we have here is still going to be here tomorrow and I was like well you get the point I had I never thought about this perspective because I know the whole process how it's super thorough I have have friends in you know protocol development team and I've know that space. But then I took his took his position. And I said, well, indeed, you know, how how do you know? Do you have guarantee if you're a business that you deploy asset? Do you have real money on that on that public infrastructure that when something happen is going to be present tomorrow?

And I guess it's on us the industry to to bring you know like some some confidence in those um those institution by education and more discussion and I think going to them um explaining how it works and how like the counterparty risk is not is reduced and not increased but it's also it's also what is exciting about the ecosystem is some completely marvel never been something that public infrastructure or like

can I tell you something also which the traditional finance has known for a long time that the blockchain industry hasn't yet figured out the in traditional finance people clearly understand what's in the competitive domain and what's in the community domain and I I I don't see that much evidence of that distinction being made in the blockchain domain because there there there is clearly a a point at which everyone can agree that we want to get to. All banks and fintexs have merged with web 3. That's the point that we want to get to. So there are strong elements of that which are a common endeavor and knocking over this type of of issue like let's win this if we win this one argument that is a major obstacle removed. That's something that the whole industry should rally around.

win this one argument and let's think about the go to market because the industry at the moment I you know has created a lot of heat and not a lot of light. Um meet the customers where they are take them on a journey. Ask them things that they can say yes to in the short term. Is there more or no? Oh, okay.

Well, thank you very much. Thank you, Tony. It was a pleasure as usual. And uh you can see us upstage if you have more question. Thank you.